Is Itan required to compensate franchisees for sales through Alternative Channels of Distribution?

According to Itan's 2025 Franchise Disclosure Document, franchisees are not entitled to compensation for sales that occur through Alternative Channels of Distribution. Itan retains the right to sell, and license others to sell, competitive or identical goods and services through these alternative channels, which may include sales within a franchisee's territory.

The FDD defines "Alternative Channel of Distribution" as any sales method other than retail sales made to customers present at an Itan Salon. Examples of these alternative channels include direct marketing (such as internet sales, catalogs, or telemarketing), sales through retail stores not branded as Itan (like grocery stores, convenience stores, spas, and tanning salons), and wholesale sales.

This policy has significant implications for prospective Itan franchisees. It means that Itan can generate revenue through channels that may compete with the franchisee's salon without sharing any of that revenue. While franchisees can market outside their territory, they cannot engage in targeted marketing into another franchisee's territory unless it's part of a cooperative advertising effort. This lack of compensation for alternative channel sales is a notable factor for potential franchisees to consider when evaluating the overall profitability and revenue potential of an Itan franchise.